US Lawmakers Target Prediction Market Insider Trading with New Bill

• Bipartisan legislation has been introduced to prohibit government officials from using non-public information for betting on prediction markets.
• The proposed bill applies to a wide range of officials, including the President, Vice President, and members of Congress.
• Financial penalties for violations could reach double the amount of profit gained from illicit trades.

Targeting Insider Trading in Prediction Markets

A bipartisan group of U.S. lawmakers, including Todd Young, Elissa Slotkin, John Curtis, and Adam Schiff, has introduced the Public Integrity in Financial Prediction Markets Act of 2026. This move follows growing concerns that platforms like Kalshi and Polymarket could be exploited by those with access to sensitive government data. Representative Slotkin emphasized that public servants should not profit from knowledge gained through their roles, describing the bill as a necessary step toward establishing common-sense rules with significant consequences for violators.

Scope and Definitions

The legislation aims to prevent high-ranking government executives and employees from leveraging insider information—defined as data that a reasonable investor would find critical but is not available to the general public. If passed, the law would govern:

• The President and Vice President
• Members of the House of Representatives and the Senate
• Political appointees and staff at executive or independent regulatory agencies

Reporting Requirements and Penalties

Under the bill, officials must adhere to strict transparency standards. Any wager exceeding $250 on a prediction market must be reported to a supervising ethics office within 30 days. These reports must detail the number of contracts, the price, the transaction date, the specific platform used, and the resulting profit or loss. To deter misconduct, the bill establishes fines that are either $500 or double the profit made from the trade, whichever is greater.

Broader Legislative Context

This proposal is the second major bill this week aimed at regulating prediction markets. It follows the PREDICT Act, introduced by Representatives Adrian Smith and Nikki Budzinski, which specifically targets insider trading related to policy decisions and political outcomes. While prediction market platforms have recently attempted to tighten their own internal rules, federal lawmakers are increasingly seeking formal statutory frameworks to separate legitimate wagering from prohibited financial exploitation.